Hungarian House Prices Skyrocketed in the Past Decade

Housing prices in Hungary have nearly doubled in the past ten years; the extent of price increases was higher only in two other European Union member states in this period. Despite the jump in prices, interest in home purchases remains strong.

Average residential real estate prices in Hungary increased by nearly 100% in the last ten years, according to a report by Eurostat, the EU’s statistical office. That is an outstanding figure as housing prices in all member states of the EU rose by an average 30.9% over the same period. In the first quarter of 2021, house prices increased in 23 EU states compared to 2010, with the biggest jump in prices recorded in Estonia (+126.8%) and Luxembourg (+108.2%), followed by Hungary. Prices decreased in Greece, Italy, Cyprus, and Spain since 2010.

Still going strong
The economic malaise caused by the pandemic has not left real estate markets unscathed. As a result, Hungary slipped to third from second place among all EU countries, where it stood 6 months ago. In January, only Estonian housing price increases preceded those in Hungary. Despite the steep rise in real estate prices, activity in the residential property market activity remains strong in Hungary. In June 2021, 13,615 residential property transactions were concluded nationwide, according to estimates by real estate experts Duna House. The number of transactions is the highest reading for any June in the last five years, representing a 29% increase compared to the same period in 2019, and a 22% increase compared to June 2020. The total number of transactions probably reached 83,000 in the first half of 2021; significantly outperforming the first half of the last five years, Duna House says. The market is also driven by a surge in demand for mortgages, with outplacements on the rise for months. May was a record-breaking month in terms of mortgages as Hungarian households applied for housing loans worth more than HUF 120 billion, according to data published by the central bank. Going forward, about 58,000 Hungarians have firm plans to purchase or build a home in the coming year, a survey conducted by research company GKI and building materials maker Masterplast shows. Another 187,000 households will "probably" buy or build a home in the next twelve months, according to the survey. Rental prices also increased over the past decade, albeit at a slower pace than housing prices, according to Eurostat. Rental fees rose by an average 43% versus 15% in the EU. The increase is the fifth largest increase in the block after Estonia, Lithuania, Ireland and Austria. The only EU states to report a drop in rental prices were Cyprus and Greece.

Summer housing in demand
The rising trend in the residential segment remains in place, primarily driven by skyrocketing summer housing prices in the main holiday areas of Lakes Balaton, Velence, Tisza and the Danube Bend. In fact, the pandemic drove prices higher as many residents of urban areas decided to move to green areas or near water during the quarantine period. Interest in apartments, houses and holiday homes jumped by 150% since 2016, according to a study based on 40,000 advertisements and published by the real estate specialist agency ingatlan.com. Prices at Lake Balaton, Hungary’s most sought after holiday area, are similar to those seen only in the capital with average prices per square meter standing at HUF 700,000 HUF. The jump is also attributable to short supply, which declined by 40% on the northern shore of the lake.At Lake Velence, the average price per square meter was HUF 655,000, which means an increase of 20%. At Lake Tisza, prices also increased by 20% to HUF 175,000 HUF per square meter. In the Danube Bend area, average housing price rose by 44-59%, and the most popular cities of the region (Nagymaros, Visegrád and Zebegény) recorded prices ranging between HUF 457-542,000 per square meter. Experts believe that housing prices are set to increase further on the back of skyrocketing costs in the building materials segment. The price of key building materials rose by double digits over recent months, in the case of steel, for example, the increase was close to 80% in the past 8 months. Due to the significant cost pressure, further price increases for new homes are inevitable, Tibor Földi, Chairman of the Board of real estate developer Cordia International Zrt. told news website Telex.